What is Tax-Free Shopping?

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For international travellers in the know, tax-free shopping can have a major impact on the amount of spending they are willing to do. Tourists visiting from outside of the European Union are eligible to receive a tax refund on their purchases within EU-member states. 

tax free shopping
gadget store salesman showing a video camera to customers

How are tax refunds claimed?

Refunds are mostly claimed through third-party providers, which traditionally have had concession stands/areas at the airport. Customers would hand over printed VAT receipts, refund forms and a photographic ID with proof of residency – usually a passport. Forms were completed and a commission of up to 60% was taken from the total amount of the refund. Finally processing times at the airport are usually long and refunds can take up to 30 days.

Difficulties with traditional tax refund processes

For the aforementioned system to work, retailers often need to partner with the only refund facilitating company available. This is a complicated process for many small and medium enterprises, and research has shown that over 80% of shops end up being left out for commercial reasons, which means that tourists will often skip them in favour of businesses that offer TFS. Additionally, high commissions charged by the refund facilitators have meant that only luxury purchases were worth claiming.

The future of tax-free shopping

The future of tax-free shopping looks brighter for both consumers and merchants alike. By digitalising the entire TFS eco-system, app-based refund facilitating company, Refundit, allows customers to claim their tax refunds in approximately 15 minutes by scanning VAT receipts with their smartphone or uploading digital copies of them and validating the claim digitally. Commission with the Refundit app is as low as 9% — an industry-leading, low and fair fee, and a significant reduction compared to other traditional solutions. These low commission rates and easy-to-use processes encourage an increase in consumer spending and mean that all retailers, regardless of outlet size and price point, can benefit from this revolutionary new technology.

Digitalizing the tax free shopping process